While all eyes are on Congress and the newest plan to repeal and replace the Affordable Care Act (ACA), another branch of the federal government proposed major changes to the health insurance landscape. Last month, the Department of Health and Human Services (HHS) under new Secretary Tom Price proposed a rule aimed at stabilizing the individual health insurance market. After a 20-day comment period, HHS received almost 4,000 comments from state regulators, consumer advocates, health insurers, private citizens, and myriad other stakeholders, a sign of the widespread impact the rule would have if implemented.

Last week, we summarized comments from a selection of insurance industry stakeholders. This week, we’re looking at the comments from consumer advocates. CHIR pulled a sample of comments from the array of consumer advocacy groups, as follows:

• Families USA
• Center on Budget and Policy Priorities
• American Cancer Society Cancer Action Network
• National Association of Insurance Commissioners – Consumer Representatives
• Community Catalyst
• American Diabetes Association
• American Association on Health and Disability
• American Association of Retired Persons
• American Heart Association

Comments addressed a number of provisions of the proposed rule. Here are a few of the common themes:

Length of Comment Period: dissatisfaction with the fast-tracked timeline

The proposed rule came out February 15^th. Comments were due March 7th, just 20 days later. Typically, comment periods are at minimum 30 days, but based on the impending deadlines for insurers to finalize 2018 rates, it’s likely that HHS hopes to get the rule finalized as soon as possible. However, many advocates found the hastened timeline for comments inadequate given the breadth and depth of the rule.

Open Enrollment Period: concerns about outreach and education, reduced enrollment

Starting in 2017, HHS proposes shortening the annual open enrollment (OE) period, which in the past has run from November 1^st to January 31^st of the next year. The proposed rule would close OE on December 15^th this year, effectively cutting it in half. This new date responds to insurers’ concerns that consumers were delaying enrollment until the end of January, thereby avoiding a full calendar year of premiums. However, consumer advocates are concerned the reduced timeline will test the education, outreach, and administrative limits of the state exchanges, possibly at the expense of consumers and the health of the risk pool.

The American Association on Health and Disability (AAHD) in partnership with the Lakeshore Foundation noted that consumers with disabilities have unique medical needs that require extensive reviews of provider networks and calculations to determine out-of-pocket costs. Shortening the OE period, they argue, would hinder a consumer’s ability to shop for a plan that best meets their needs. Families USA expressed concern about the reduced amount of time for consumer education, assistance, and enrollment, noting skepticism that the Centers for Medicare and Medicaid Services (CMS) will “conduct extensive outreach to ensure that all consumers are aware of this change” based on the Administration’s decision to cut outreach efforts at the end of the OE4. Other organizations, such as the Center on Budget and Policy Priorities (CBPP) and the American Diabetes Association (ADA), suggested that a shorter OE could dampen enrollment, especially for young and healthy people who tend to wait until the last minute to sign up for coverage. This could cause adverse selection, creating an unstable risk pool.

Special Enrollment Periods: increased verification requirements, decreased eligibility and flexibility

The new rule proposes changes to Special Enrollment Periods (SEPs). Under the ACA, individuals can enroll in coverage outside of the annual OE if they experience a qualifying event, like losing insurance coverage (e.g., leaving a job), having a baby, or moving. Insurers have raised concerns about the higher health risk associated with SEP enrollees, claiming that many people who don’t actually qualify for a SEP are abusing the system to purchase insurance when they need health care services. While the Obama Administration took steps to limit inappropriate SEP enrollments, insurers have continued to ask HHS to require consumers to provide documentation of their SEP eligibility before being allowed to enroll in coverage. The proposed rule not only imposes pre-enrollment verification requirements for SEPs, but also restricts movement between metal tiers and tightens eligibility for certain qualifying events.

Consumer advocates voiced concerns that pre-enrollment verification presents a bureaucratic obstacle for consumers. The National Association of Insurance Commissioners (NAIC) Consumer Representatives pointed out that creating more hoops to jump through could discourage enrollment, especially among healthy people who are less likely to seek out insurance and follow through on signing up for coverage. ACS CAN argued that the proposed documentation requirements might cause major delays and gaps in coverage for cancer patients, which could interrupt treatment and “seriously jeopardize their outcomes.” Consumer groups also criticized new restrictions limiting SEP qualifying events and consumers’ ability to change metal tiers during a SEP. AAHD and the Lakeshore Foundation cited examples where a life event triggering an SEP would result in new insurance needs, such as the birth of a child with disabilities, which could require coverage in a different metal tier. The proposed eligibility standards elicited intense opposition from advocacy groups, with Families USA arguing that the proposal of requiring prior coverage to qualify for a permanent move or marriage SEP would prove particularly difficult for consumers who previously didn’t qualify for marketplace coverage, such as those who move from a Medicaid non-expansion state or whose combined income from a marriage allows them to finally purchase coverage.

Guaranteed Issue: proposals to require past-due premium payments and continuous coverage may violate the ACA’s guaranteed issue provision

One of the ACA’s most popular reforms is the guaranteed issue provision. Under the law, insurers must issue policies to all applicants, no matter their health status or perceived risk. HHS proposed a not-so-slight tweak to this standard, allowing insurers to condition enrollment on repayment of all past-due premiums for coverage under the same product or a different product offered by the same insurer in the previous 12 months. Additionally, the proposed rule sought comment on potential future policies that would impose continuous coverage requirements, such as higher premium rates, waiting periods, and late enrollment penalties.

Consumer groups expressed particular concern with a new requirement that consumers pay past-due premiums before they can enroll in coverage. Community Catalyst called the proposed rule invalid under current law. CBPP similarly noted that there is no “statutory exception” to guaranteed issue that would allow insurers to “delay or deny new coverage when a person has failed to pay premiums in the past.” Disease groups like ACS CAN pointed to widespread financial hardship for consumers with health conditions such as cancer. When someone gets sick, premium payments are stacked on top of high cost-sharing for covered and uncovered services. Nearly half of all American adults are unable to cover an emergency expense of $400 out of pocket, making a requirement to submit additional premium payments upfront an effective bar to enrollment.

On continuous coverage, organizations doubled down on the legality of conditional guaranteed issue. Both Families USA and the CBPP argued that creating a penalty that withholds future coverage, such as a waiting period or rate hikes, is “completely inconsistent with guaranteed availability.” The American Heart Association (AHA) cited a 2010 survey of non-elderly adults, which found that, among cardiovascular patients, 24 percent had gone without health insurance at some time since their diagnosis; 36 percent of stroke patients had similar gaps in coverage. The AHA urged Secretary Price to consider the various reasons consumers experience gaps in coverage, especially for patients with chronic conditions, who face additional challenges of job instability and financial constraints because of their disease.

Actuarial Value: increased consumer cost-sharing, decreased value of federal subsidies

Under the ACA, individual and small-group insurers must meet “actuarial value” (AV) standards, meaning that they cover a minimum percentage of health care expenses. Plans are sorted into metal tiers based on their AV: Bronze (60 percent), Silver (70 percent), Gold (80 percent) and Platinum (90 percent). Because it is difficult to hit an exact percentage, prior Obama Administration rules allowed insurers a margin of error, so that plans must come within +/- 2 percent of the threshold. For example, so long as a plan was between 68 and 72 percent AV, it would be considered a Silver-level plan. The proposed rule would increase the “de minimis” variation of a plan’s AV to -4/+2 percentage points. In other words, this would permit insurers to offer plans at 56 percent AV and still be considered a Bronze-level plan. While cost-sharing would increase for these plans, their premiums would likely be lower.

A Families USA analysis found that reducing the AV of a plan from 68 percent to 66 percent could increase the enrollee’s deductibles by more than $1,000; that’s about 1.5 iPhones, on top of the cost of seven iPhones that the average family on employer-sponsored insurance will pay in premiums every year. A number of groups warned of the potential effects on advanced premium tax credits (APTCs), which are calculated based on plan premiums and a consumer’s income. Lowering premiums through increased cost-sharing would reduce the value of the premium subsidy, forcing consumers to pay more out of pocket. The American Association of Retired Persons (AARP) echoed this sentiment, advising CMS to monitor the effects of this extra wiggle room on the quality and affordability of coverage.

The Proposed Rule in Context

The elephant in the room, of course, is the threat of a full or partial repeal of the ACA. As one congressman described, crafting policies and regulations in the health care sphere at the moment is like “shooting a moving target.” Indeed, many of the efforts of the previous Administration to strengthen the marketplaces would be undermined by a full or partial repeal of the ACA. HHS is likely to move quickly to implement these proposed changes, hoping that if they do so, insurers will be more likely to remain in the marketplaces and keep premium hikes modest. Given the broader threats to repeal or roll back key provisions of the ACA, consumer advocates are concerned that this rule may harm enrollees without delivering the market stability HHS is hoping for.